Your thoughtful commentary reminds me of the famous movie line from Jerry Maguire: “You had me at hello.” But in your case, your article lost me at your first question about Uber: “Why does Uber still struggle more than a decade after achieving so-called network effects?”
I agree that statement was not the right opener. That said, I'm not convinced that Uber's profitability is indicative of any sort of advantage for the business beyond (1) market power and (2) poor employment options for a growing base of commoditized workers. Your article (very well researched) corroborates that Uber has built absolutely no structural advantage. It is only extracting from a position of market power. It is sustainable as long as the commoditized supply party goes on. But I don't see any structural advantage developing for Uber yet and if you can look past that initial question, which I acknowledged was excessively skewed, I don't see Uber any closer to any lasting structural advantage.
I've echoed your arguments about Uber's structural weakness for years in articles on forbes.com dating back to 2017. What I (or we?) underestimated was:
1. The sizable consumer surplus available from one of the best consumer value propositions ever created, unlocked by the 95% US rideshare duopoly of publicly traded companies under pressure to demonstrate profitability. In short, Uber enjoys considerable market pricing power. While in theory, dual-apping is a limitation, in practice, most consumers are "lazy loyalists."
2. The robust supply of financially stretched driversmwilling to drive for Uber despite declining pay rates. Uber has always touted the driver benefits flexibility. But in practice, Uber's flexibility and frictionless onboarding process has enabled it to exploit strong supply with declining pay
3. AI-driven improvements in price discrimination on both sides of Uber's marketplace which has markedly improved Uber's gross margins
4. Devilishly effective "upfront pricing" policies which has unlocked the full potential of algorithmic price discrimination
5. ...All aided by strong, sustained post-pandemic growth.
Your thoughtful commentary reminds me of the famous movie line from Jerry Maguire: “You had me at hello.” But in your case, your article lost me at your first question about Uber: “Why does Uber still struggle more than a decade after achieving so-called network effects?”
Over the past two years, Uber has become a profitable, cash-generating machine whose stock price has nearly quadrupled. So rather than try to explain Uber’s ongoing struggles, it may be more productive to try to understand the drivers behind its remarkable turnaround. Here’s my view on that question… https://len-sherman.medium.com/the-inconvenient-truths-ubers-ceo-doesn-t-want-you-to-know-2fc0cd742b24
I agree that statement was not the right opener. That said, I'm not convinced that Uber's profitability is indicative of any sort of advantage for the business beyond (1) market power and (2) poor employment options for a growing base of commoditized workers. Your article (very well researched) corroborates that Uber has built absolutely no structural advantage. It is only extracting from a position of market power. It is sustainable as long as the commoditized supply party goes on. But I don't see any structural advantage developing for Uber yet and if you can look past that initial question, which I acknowledged was excessively skewed, I don't see Uber any closer to any lasting structural advantage.
We are in agreement.
I've echoed your arguments about Uber's structural weakness for years in articles on forbes.com dating back to 2017. What I (or we?) underestimated was:
1. The sizable consumer surplus available from one of the best consumer value propositions ever created, unlocked by the 95% US rideshare duopoly of publicly traded companies under pressure to demonstrate profitability. In short, Uber enjoys considerable market pricing power. While in theory, dual-apping is a limitation, in practice, most consumers are "lazy loyalists."
2. The robust supply of financially stretched driversmwilling to drive for Uber despite declining pay rates. Uber has always touted the driver benefits flexibility. But in practice, Uber's flexibility and frictionless onboarding process has enabled it to exploit strong supply with declining pay
3. AI-driven improvements in price discrimination on both sides of Uber's marketplace which has markedly improved Uber's gross margins
4. Devilishly effective "upfront pricing" policies which has unlocked the full potential of algorithmic price discrimination
5. ...All aided by strong, sustained post-pandemic growth.
As you noted, Uber's newfound wealth reflects its considerable market power, unsurprisingly aided and abetted by numerous anti-competitive behaviors, which should be of interest to FTC/DOJ, as I articulated here: https://www.forbes.com/sites/lensherman/2024/09/06/why-the-ftc-needs-to-investigate-ubers-anti-competitive-business-practices/